Florida is the only state in the United States to impose a sales tax on rents. The State of Florida has imposed a sales tax on commercial rents since 1969. Currently, the tax is imposed at the rate of 6 percent in every county except Miami-Dade, which fixes the rate at 7 percent.

The tax imposed on commercial property leases is not limited to the base rent; sales tax is also imposed and calculated on any additional rent, including a tenant’s share of common area maintenance (CAM) charges, real property taxes, insurance, and just about all other charges or consideration required or paid by a tenant under the terms of a lease.

The good news is that on May 25, 2017 Governor Rick Scott signed House Bill 7109, which beginning January 1, 2018 reduces the general state-level tax on rents (sometimes commonly referred to as the business rent tax), from 6 percent to 5.8 percent (a 3.33% reduction). This reduction applies to rent payments due and payable for occupancy periods beginning January 1, 2018. Rent payments tendered prior to January 1, 2018 (for occupancy periods after January 1, 2018), will be subject to the reduced 5.8% state sales tax (plus any applicable discretionary sales surtax). However, rental charges paid on or after January 1, 2018 for rental periods prior to January 1, 2018 are still subject to the 6% state sales tax (in other words, like so many other things in life, tardiness is NOT rewarded). The tax rate in effect at the time a tenant occupies, uses, or is entitled to occupy or use the property is the tax rate applicable to the transaction, regardless of when a rent or license fee payment is due or paid. The applicable tax rate may not be dodged by procrastination or early payment of rent or license fee payments. Accordingly, if a landlord receives rent payments in 2018 for a December 2017 occupancy, the 6 percent state-level rate would still apply (plus any applicable local surtax). On the other hand, if a tenant paid rent in 2017 (or earlier) for a 2018 (or later) occupancy, the 5.8 percent rate would apply – the same amount as if the 2018 rent was paid in 2018.

In addition to the 5.8 percent general state-level tax, a landlord must also collect any applicable local option surtax that many Florida counties impose, which is not affected by this new reduction. The optional surtax varies from county to county between 0.5 percent and 1.0 percent. There is no reduction in the rate of this local tax. For example, both Sarasota and Manatee County impose a local surtax at the rate of 1%, so beginning January 1, 2018 lease payments in Sarasota and Manatee Counties will be taxed at 6.8% (5.8% + 1%).

Please note, the sales tax rate reduction does not apply to charges for parking a motor vehicle, for docking a vessel, or for tying down or storing an aircraft in a hangar.

Landlords and property management companies should be aware of the reduced state-level sales tax amount and tweak their accounting and billing software accordingly. A handy primer on Sales and Use Taxes on Commercial Real Property Rentals (prepared by the Florida Department of Revenue) is available at:

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

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